Food stamp eligibility saved; trust payments not “income”

In a recent decision by the New Hampshire Supreme Court, the Court ruled that trust payments to third party vendors were not countable as “income” to the trust beneficiary for purposes of determining her eligibility for food stamps. Petition of Kelly Hagenbuch.

The federal food stamp program (called SNAP in New Jersey) is available to individuals who meet certain income and asset limits. Kelly Hagenbuch was a recipient of food stamps in New Hampshire. She was also the beneficiary of an irrevocable trust that had been established for her sole benefit. Kelly had no right, title or power over the distributions, and could not compel a distribution under any circumstances. The Trustee made payments from the trust to various third parties for such things as administration expenses and taxes. These payments were considered to be payments to third party vendors, which are normally excluded from “income” under the program’s rules. In reviewing the trust, the agency determined that the trust’s distributions should be treated as “income” to Kelly, and terminated her benefits, as the income would disqualify her from receipt of benefits. Kelly sought court review.  The New Hampshire Supreme Court held that these vendor payments did not count as her income because the trust funds were not “owed to” her — in other words, that she had no right to compel the payments. Petition of Kelly Hagenbuch.

Call us to review your existing trusts and advise you on eligibility for benefits programs … 732-382-6070